IRAC

I (Legal Issue) 2-3

R (Rules/ relevant laws) 5-6
A (Application/apply facts to law) 13-15
C (Conclusion) 2-3

1. Bill case (IMG 5583):

Bill won a contract to carry out carpentry work on a large building renovation project for
Nicholson Ltd. Bill ran into financial difficulty, partly because his price was too low. He
told Nicholson he could not meet their deadline and, in fact, be unable to finish.
Nicholson Ltd agreed to pay him an extra $50,000 to complete the work. Bill did the
work, but he has only received $5,000 of the agreed extra payment. Advise Bill of his
legal rights.

I: Whether Bill can receive the whole $50,000

R: Pre-existing contractual obligation

A: In this case, Bill has a contractual obligation to do the renovation for Nicholson Ltd,
and he had done nothing more than performing sufficient contractual obligations so he
could not sue Nicholson Ltd for the remaining $45,000: Stilk v Myrick (1809) 2 Camp
317.

The Court said that the traditional common law rule (Stilk v Myrick) does not apply in
circumstances where:
● A has entered into a contract with B to do work for, or to supply goods or services
to, B in return for payment by B;
● At some stage before A has completely performed their obligations under the
contract, B has reason to doubt whether A will be able to complete their side of
the bargain;
● At the initiative of either party, B promises A an additional payment in return for
A’s promise to perform his original contractual obligations on time;
● As a result of A giving his promise, B obtains, in practical terms, a benefit (or
obviates a disbenefit);
● B’s promise is not given as a result of economic duress or fraud on the part of A.

The first three criteria had been met. But what “practical benefit” had Nicholson
received as a result of the variation? First, Williams continued on the project, relieving
Nicholson of the need to find another subcontractor; second, Nicholson avoided having
to pay penalty damages under the head contract for failing to complete on time; and
third, they did not have to sue Bill for breach of contract (litigation is expensive, lengthy
and uncertain). Furthermore, and a very important consideration for those who argue
that contractors might be “held to ransom”, there was no suggestion that Bill had applied
any duress to Nicholson. It was, in fact, Nicholson that had initiated the variation. Had
Bill threatened not to work until Nicholson promised him an extra payment, the variation
would not have been enforced (as it would encourage opportunistic or oppressive
behavior by a party in a stronger position).

If Bill could prove that he did more than his contractual obligations, he may have a
better chance of reclaiming the money Glasbrook v Glamorgan County Council [1925]
AC 270.

C: In this case, as Bill just barely finished his contract, he could not claim $50,000. The
company decided to use $50,000 to help him deal with the financial difficulties, not an
additional reward when finished the contract

1. Alice case: (IMG 5585):

Alice traveled on an interstate bus to Bolton to get her admission in the degree program
at one of the Universities there. Upon reaching the University, she realized that she left
her folder containing all her certificates on the bus. She contacted the bus company.
With the assistance from the bus company, she then contacted the bus driver and
asked if he could help to deliver the folder to her. The bus driver made a trip to the
University and handed over the folder to her. Alice was very relieved and pleased and
instantly announced that she would reward the conductor with $500. Once her
admission formalities were finalized, Alice realized that she had been too impulsive and
now refuses to hand over the reward, saying that there was no agreement as there was
no consideration to support her promise. Do you agree? Justify your answer.

I: Whether Alice could refuse to hand over the reward to the conductor
R: Past consideration and Promissory estoppel
A: In this case, a contract was formed between Alice and the conductor when the
conductor gave her the folders, so there was a past consideration. Therefore,
promissory estoppel could be applied to the case to prevent Alice from withdrawing
her promise.
C: In conclusion, Alice had to pay the reward for the conductor as there was a past
consideration and promissory estoppel to prevent her not paying the conductor. (case
kiếm sau)

2. Jean Case: (IMG 5587):

Jean advertises her car for sale in the local paper for $15,000. A woman comes to
inspect the car, and Jean thinks she looks like the singer Kylie Minogue. The woman
offers to buy the car on the spot and pays with a personal cheque. Jean is overcome
with awe because she believes that she is talking to Kylie Minogue and accepts the
personal cheque in the name of ‘Kylie Winogue'. Jean takes the cheque to the bank the
next day. Three days later the bank calls her to tell her that the cheque is dishonored.
Jean contacts the police to search for the car and the dishonest buyer. The police find
the car at Emma's house. Emma claims she bought the car on Wednesday for $15,000
from a girl who looked like Kylie Minogu. Can Jean recover her car from Emma?

I: Whether Jean can get her car back from Emma

R: Unilateral mistake. In typical situations, the contract will either be void for the
mistake or voidable for fraud. The significance of the distinction between a void and
voidable contract, as in the following cases, is that an innocent third party receives no
title to the goods under a void contract but may receive title under a voidable contract
(depending on whether the seller rescinds the contract before the rogue sells to an
innocent third party)

A: In this case, Jean mistaked the woman who bought the car as a celebrity and sold
the car as a “rogue.” At this moment, if Jean realized the “rogue” was fraudulent, she
could immediately void the contract, but she did not. When she knew she was deceived,
she could not ask Emma to return the car as the third party (Emma) received the title
under a voidable contract, and the contract was not rescinded before the “rogue” was
sold to Emma. |Lewis v Avery [1972] 1 QB 198|.

[Briefly, the contract between Jean and the rogue was not void for mistake because
Jean intended to contract with the person before her. The contract was, however,
voidable for fraudulent misrepresentation and could have been rescinded by Jean
provided she had acted before Emma, acting in good faith and unaware that of the
fraud, had contracted with the rogue. She had not done this and, therefore, Emma
received a good title for the car.]

C: Jean could not retrieve her car as the “rogue” sold the car for Emma before she
could rescind the contract.

3. Alan case: (IMG 5588)

Alan read an advertisement in a newspaper which was as follows:
● Used car for sale
● 3-year-old Magenta Wow
● Only 60,000 km
● Call Bahari 954-234 6789
Alan called Bahari and went to see the car. After a test-drive, Alan offered to buy the car
for $8,00. Bahari agreed. The next day, the transfer was registered and Alan paid
Bahari $8,000 cash. Two weeks later, the car stalled. Alan’s mechanic, upon inspecting
the car, told Alan that the car had previously met with a bad incident. The repair marks
were clear on the under-carriage. Also, the odometer had been replaced. According to
the mechanic, the car is at least 5 years ago and must have done about 150,000 km.
Advise Alan on what his rights and remedies are.

I: Whether Alan could sue Bahari for deceiving him and claims damages under
fraudulent misrepresentation.

R: Fraudulent misrepresentation and remedies - a lie used to trick someone into an

agreement that harms them.

A: In this case, the advertisement and facts are different due to wrongful information.
As Alan had his mechanic examine the car and found many parts of the car have been
damaged or replaced (not 3 years but 5 years, not correct about accident-free and have
run 150,000 km, not only 60,000km), he could legally sue Bahari for fraudulent
misrepresentation of the car. He could refuse to be bound and bring an action for
rescission where necessary, and he could sue for fraud and reclaim his lost benefits.

C: Alan could sue Bahari for fraudulent misrepresentation and reclaim his money

4. Alice case [5590]

Toby wants to sell his Subaru WRX car as it is very expensive to run and has bad fuel
economy. His neighbor Alice would like to purchase a car to replace her old 4WD, which
uses a lot of fuel. She is looking for a reliable car that is cheap to run. Toby convinces
Alice that his vehicle will suit her needs. He claims that the car is very fuel efficient and
does not need to be filled up as frequently as her old car. So Alice purchases Toby's
car. When Alice’s brother Mark visits her, he is horrified that she has purchased a WRX.
He explains that while it is not fuel efficient, it also requires premium fuel which is very
expensive per liter, and thus is a very expensive car to run overall. Alice is furious and
demands her money back from Toby. Toby claims that he did not mislead Alice, since
what he told her was true. Discuss Alice’s legal position and any remedies available to
her.

I: Whether Alice could sue Toby and reclaim her money

R: Fraudulent misrepresentation and remedies

A: In this case, the advertisement and facts are different due to wrongful information.
Since the car was found to be not fuel efficient and require premium fuel (as opposed to
being fuel efficient and cheap to run according to what Toby said), she could legally sue
Toby for fraudulent misrepresentation of the car.

C: Alice could sue Toby for fraudulent misrepresentation and reclaim her money

5. Tracy case:
Tracy runs a confectionary store specializing in expensive imported lollies from around
the world. Every evening, Tracy takes the money out of the cask register and transfers it
to her safe. On one evening, 2 armed men come into the store as Tracy is transferring
the money and steal $5,000 in cash from the register. Tracy calls the police after the
robbers have left her store. Constable Harold comes to Tracy’s shop to get a statement
from her about what happened. Tracy tells Harold that if he finds the thief, she’ll give
him $500. 2 days later, Harold identifies and arrests the armed robbers but Tracy
refuses to pay him the money. Does she have to give Harold the money?

I: Whether there is a valid consideration in Tracy’s promise

R: Good consideration, performing existing contractual or public duty
Carrying out a duty in which a party is already obliged to perform by law is not
consideration for a promise made in exchange for that performance. Therefore,
performance of a public duty will not amount to consideration unless it involves doing
something in addition to or in excess of that legal duty: Collins v Godefroy (1831); 109
ER 1040
A: Harold is a police officer and obliged by law to seek and arrest criminals as part of his
public obligation as a member of the police service. His promise is something that is
related to his job and is not sufficient consideration. Harold therefore not offered
anything “of value” into the agreement and can not sue for money
If he can prove that he had done something more than his obligation, he may have a
better chance of claiming the money. Glasbrook v Glamorgan County Council [1925]
AC 270
C: Tracy is unlikely to be bound to pay Harold any money as arresting criminals is part
of his duty

6. Peter case:
Over dinner one evening, Peter and Fred decide to each contribute $10,000 to form a
partnership to invest in a business venture. A written partnership agreement is drafted,
which includes a stipulation that all profits from the venture are to be shared equally
between partners. Fred invests an additional $5,000 to secure office premises and
furniture for their venture. After 6 months, the business venture still has not commenced
and no profit has been made. Peter asks Fred to refund his $10,000 contribution but
Fred refuses since he has incurred debts and liabilities. Peter argues that because there
was no profit, their partnership is invalid. Is Peter correct?
I: Whether there is a partnership existed between Peter and Fred

R: Article 1 of Partnership Act 1892 (NSW)

Discuss group number, informality of formation, written partnership agreement - all
indications that a valid partnership exists.

Venture continued for six months only and was never commenced - see Khan v Miah
[2000] 1 WLR 2123 where the Court decided that the partnership commenced when the
proposed partners took their first steps to implement their business plan.

The courts now recognise that a single enterprise engaged in a joint venture may
constitute a partnership particularly when there is profit sharing and a more integrated
business structure.

Khan v Miah [2000] 1 WLR 2123 and Goudberg v Herniman Associates Pty Ltd [2007]
VSCA 12

A: Although the partnership agreement was drafted and not signed, a partnership
between Fred and Peter was formed. Although they did not make any profit. They all
shared a view to profit and invested in their venture according to section 1 of the
Partnership Act 1892 (NSW).
Furthermore, Fred also secures the office premises and furniture for their partnership
venture, so their first step in implementing their business plan was deployed, similar to
Khan v Miah [2000] 1 WLR 2123.

C: Peter was wrong as there was a partnership between him and Fred so he could not
get his money back.

7. David case:

David is excited by his appointment to the board of directors of a financial investment

company. He has worked as a financial planner for several decades and is excited to
offer his financial expertise to the company’s board. The board customarily relies
heavily on the advice of the chief financial officer and rarely scrutinizes his financial
reports prior to submitting to ASIC. David however tries to make informed monthly
meetings with key managerial staff to stay abreast of the company’s business activities.
He becomes worried that he might be liable for automatically breaching relevant Section
of the Corporations Act 2001 every time he makes a poor commercial decision. He has
been advised by his lawyer about the Corporations Act 2001 providing some defense
against breaches of that relevant section. Explain to David which section of the
Corporations Act that he could likely breach and the circumstances in which this
protection/defense may apply.

I: Whether David breached section 180(1) of the Corporation Act and the circumstances
in which this protection/defense of 180(2) may apply

R: Corporation Act 2001

Section 180(2) - In effect, the rule provides a “safe harbor” for directors when they make
informed and honest decisions but ones which ultimately are proved to be wrong. The
rule provides directors and other officers with a presumption that they have met the
requirements of s 180(1) if they rationally believe that the decision is in the best
interests of the corporation

Australian Securities and Investments Commission v Adler [2002] NSWSC 171. The
Court decided that ASIC had failed to prove that the directors had breached their duty of
care and diligence. They met the requirements of the business judgment rule because
they held a rational belief that their actions were in the best interests of the company

A: As David tries to make informed decisions when fulfilling his directorial duties, by
reading the financial reports thoroughly and also sets monthly meetings with key
managerial staffs to stay abreast of the company’s business activities. He tries his best
in making business decisions and this is similar to the judgment in Australian Securities
and Investments Commission v Adler [2002] NSWSC 171

C: As David may make mistakes in giving business decisions and breach section
180(1), he has section 180(2) serve as his defense as he did his work honestly.

8. Peter, Paul and James case [5605]:

Peter, Paul, and James are appointed to the board of directors of a large chemical
company. Simon is appointed as company secretary, and he is also employed by the
company as their senior in-house lawyer. The board relies heavily on the financial
expertise of their chief financial officer, and often the figures on the company's reporting
requirements to ASIC. These statements grossly overstate the financial stability of the
company. Due to poor management the company is then involved in a large chemical
spill which causes significant environment damage and personal injury, and a class
action is taken against the company. The company is ordered to pay $1 billion in
compensation however the company is revealed to be unable to meet its obligations
and must be liquidated. ASIS takes action against the company directors and officers
for failing to act in accordance with their duties under 180 of the Corporations Act 2001.
Peter, Paul, and James argue in their defense that they relied on the advice of the chief
financial officer. Simon argues that ASIC’ allegations against him relate to actions made
in his capacity as in-house lawyer and not in his capacity as a company secretary.
Explain the duties and liabilities of directors and officers under the Corporations Act
2001 and discuss whether there has been a breach, in light of statute and case law.

I: Whether there has been a breach in the light statute and case law and the duties and
the liabilities of the directors and officers

R: Section 180 - Care and diligence - directors and other officers

(1) A director or other officer of a corporation must exercise their power and
discharge their duties with the degree of care and diligence that a reasonable
person would exercise if they:
(a) Were a director or officer of a corporation in the corporation’s
circumstances; and
(b) Occupied the office held by, and had the same responsibilities within the
corporation as, the director or officer.

The High Court has held that the degree of care and diligence required in s180(1) is
determined by looking at the corporation’s circumstances and the responsibilities that
the officer had.

Australian Securities and Investments Commission v Healey [2011] FCA 717; (2011)
196 FCR 291: each of the directors and officers had breached his duty of care and
diligence and had failed to take all reasonable steps to ensure compliance with the
financial reporting obligations in the Act. There is a core, irreducible requirement of
directors to be involved in the management of the company and to take all reasonable
steps to be in a position to guide and monitor the company.

A: For Peter, Paul and James:

According to the Business Judgment rule stated in section 180 of the Corporation Act,
Peter, Paul and James must have the responsibility to make the judgment for the best
of the company and rationally because they are the board directors of a large company.
Because their decisions affect the whole company, they should be more reasonable, be
more careful about the data and shouldn’t let personal interest (rely heavily on the CFO
advice) intervene in the decision making process. As a result, they must not rely heavily
and use reliance on the chief financial officer as their defense against ASIC.
For Simon: Since Simon is also an officer of the company, he is also bound to the duties
under the section 180 of the Corporations Act so he also has the responsibility to make
the judgment for the best of the company.
Conclusion: Peter, Paul, James and Simon are the directors and officers of the
company so they are bound by the duties of the Corporations Act.
11. Simpkins ( advertising agency) [ Image 5622].

Simpkins, an advertising agency, is to place television and newspaper advertisements

on behalf of a company called Com-media. As Simpkins is to personally guarantee the
payment of the advertising accounts, it seeks credit references from Com-media’s
banker. A written report supplied by the merchant banker states that Com-media is
creditworthy, but notes in the heading: “without responsibility on the part of this bank or
its officials”. Simpkins relies on the written report and places the advertisements when,
in fact, Com-media is not creditworthy. Can Simpkins recover the amount paid for the
advertisements?

I: Can simpkins recover the amount paid for the advertisement ?

R: Negligent statements causing pure economic loss

Area of law: Tort negligent misstatement

R: Since 1964, following the decision of the House of Lords in Hedley Byrne & Co Ltd v
Heller & Partners Ltd [1964] AC 465, in certain circumstances, the law will imply a duty
of care in the making of statements, and a negligent, though honest, statement may
give rise to an action for damages.

The High Court's decision in Shaddock & Associates Pty Ltd y Parramatta City Council
(No 1) (1981) 150 CLR 225 established that the duty extends to the supply of
information as well as advice, The High Court held that the city council was under a duty
of care in relation to the provision of advice or information (the court held that no
distinction should be drawn between "advice" and "giving of information") because it
was of a kind that called for skill and competence that the council professed to possess.
Further the council knew or ought to have known that the recipient intended to act or
rely on the information (reasonably foreseeable).

A: The merchant banker has effectively disclaimed responsibility for the reference it has
given; however in Hedley Byrne & Co Ltd v Heller & Partners Ltd the House of Lords
rejected earlier suggestions that liability for negligent misstatement, apart from contract,
was limited to where there was a fiduciary relationship. A duty of care in making
statements could arise in circumstances where there existed what the House of Lords
referred to as a "special relationship" between the parties. The House of Lords did not
detail the precise nature of this relationship, although it is clear that it would involve
some element of reliance. In this case, Simpkins relied on the banker's statement, which
turned out to be false. Like in Shaddock & Associates Pty Ltd v Parramatta City Council

(No 1), the banker knew or ought to have known that the recipient intended to act or rely
on the information (reasonably foreseeable),

C: Simpkins is likely to be awarded damages for the negligent misstatement.

A: The merchant banker has noted in the heading that : "without responsibility on the part of this bank or its officials''.
However, in the same document, the merchant banker still indicates that Com Media is credit-worthy. As a result, this
action of the bank can be considered negligent misstatement. Therefore, Simpkins has total right to claim for the
payment.

C: Simpkins cannot recover the amount paid for the advertisement.

12. Gerard ( football player) [ image 5627]

Gerard is a 19 year old football player who suffers a fracture of his cervical spine as a
result of a football game. Gerard is of slight build, low weight and has a long thin neck.
He alleges that the football league should have taken steps to ensure that players with
his physical characteristics are made aware of the risk of injury when p;aying in the front
row. The football league denies any duty of care and claims that Gerard was aware of
the risks in a known high-risk game and that Gerard’s team had carried out appropriate
exercises during training. Advise Gerard.
I: Does the football league have negligence of duty and care ?

Area of law: Tort voluntary assumption of risk

R: A successful plea of voluntary assumption of risk is a complete defense;

however, it is rarely raised successfully. The defendant must prove that the plaintiff
knew of the risk and that the plaintiff fully appreciated the risk and accepted it freely and
willingly. In cases involving an obvious risk, legislation applies to introduce a
presumption of awareness of the risk on the part of the plaintiff.

The onus is placed on the plaintiff to show that he or she was not aware of the risk:

Wrongs Act 1958 (Vic), s 54.

A: The football league would be able to argue voluntary assumption of risk as a

defense, as Gerard was aware of the risks in this high-risk game, and it can be
assumed that he "fully appreciated the risk and accepted it freely and willingly", It will
therefore be difficult for Gerard to show that he was not aware of The risks: Wrongs Act
1958 (Vic), s 54.

Conclusion: A successful plea of voluntary assumption of risk is a complete defense.

The football league, however, also owes a duty to take reasonable care (i.e. a general
duty of reasonable foreseeability). Perhaps Gerard should not have been placed in the
front row. The appropriate exercises in the training sessions do not appear to have been
sufficient to prevent the harm.

13. Annette [ image 5633]:

Annette is a fashion designer who wants her design to be sold in exclusive boutiques.
She meets Adrianna, who owns a chain of boutiques and they come to a verbal
business agreement. Under the arrangement, Annette will supply Adrianna with a range
of clothes, which are to remain as her property and will be displayed as such. In the
case of sale, Annette will receive 75% of the total purchase price. Annette is worried
that the business arrangement should be in writing to be binding. Advise Annette.

I: Is the arrangement between Annette and Adriana binding

R: Agency

[15.70] An agent is often appointed in writing. In some cases, the appointment is

required by statute to be in writing. For example, in most States agents employed to sell
or buy land and agents employed to sell or buy businesses cannot sue for
remuneration, that is, commission, unless the appointment of the agent is in writing.

[15.80] A verbal offer followed by acceptance in writing or verbally is sufficient to

conclude a contract of agency for most purposes other than those mentioned above. In
practice, it is usually desirable that the appointment of an agent be in writing.
A: Apply the law to the facts: A general agent has authority to act for the principal in all
matters concerning particular trade or business, or to do some act in the ordinary
course of their trade, profession business as an agent on behalf of the principal. The
relationship of principal and agent may be created verbally. A verbal offer followed by a
verbal acceptance 5 sufficient to conclude a contract of agency for most purposes;
however in practice, it is usually desirable that t appointment of an agent be in writing

C: The business arrangement is binding, but it would be better for Annette if it were in
writing

14. [Image 5636]

Julio suffers from a back injury, due to years of heavy lifting while working for Samson
Bros. Although there was a safe system of lifting available to workers, Julio rarely used
it. Now Julio seeks to sue Samson Bros for his back injury. Advise Julio of his possibility
of success.

I: Can julio sue Samson Bros for his back injury successfully.

R: Contributory negligence

At common law, contributory negligence was a complete defense. No compensation

could be recovered where the plaintiff suffered damage partly through their own
negligence and partly through the negligence of another. However, the defense of
contributory negligence is now governed by legislation

Chapter 14 Law of Torts 359 that allows for an apportionment of damage.34 For
example, in Victoria, the Wrongs Act 1958 (Vic), s2 provides:

Where any person suffers damage as the result partly of his own fault and partly of the
fault of any other person or persons, a claim in respect of that damage shall not be
defeated by reason of the fault of the person suffering the damage, but the damages
recoverable in respect thereof shall be reduced to such extent as the court thinks just
and equitable having regard to the claimant’s share in the responsibility for the damage.

Like actionable negligence, contributory negligence is the failure to take reasonable

precautions against a foreseeable risk of injury. However, unlike actionable negligence,
it does not involve a duty on the plaintiff’s part to avoid harm to others. Contributory
negligence is concerned with the plaintiff’s failure to take precautions for their own
safety. To be “contributory”, the plaintiff’s negligence must be causally relevant to the
damage suffered.

The reform legislation provides that the same principles that apply to determine a
breach of duty to another are to be applied to determine whether there has been a
failure to take reasonable care for one’s own safety.
Contributory negligence is a special defense and must be pleaded by the defendant.
The burden of establishing contributory negligence is on the party alleging it. The jury,
or the judge (if there is no jury), apportions the damages. An assessment is made of the
damages that would have been awarded if there had been no fault on the plaintiff’s part.
This amount is then reduced by the percentage of the plaintiff’s contribution. The
apportionment is worked out by a comparison of the party’s degree of departure from
the standard of a reasonable man: Pennington v Norris (1956) 96 CLR 10. In Victoria,
the Wrongs Act 1958 (Vic)36 alters the common law relating to contributory negligence
by allowing a court to reduce a plaintiff’s damages by any contribution of the plaintiff to
their own damage. A court may find that the plaintiff’s contribution was in fact 100%,
which will have the effect that the defendant has no ultimate liability.

Alzawy v Coptic Orthodox Church Diocese of Sydney, St Mary and St Merkorious

Church (No 2) [2016] NSWSC 1123.

A: Julio is an employee of Samson Bros. Samson Bros owes a duty to take positive
steps to protect Julio, and the company did it. They applied a safe system of lifting to
protect Julio. However he did not use it.

Therefore, Julio has own negligence of his health.

He can claim that Samson Bros did not have clear instructions or some faults but there
is still a contributory defense because this damage occurs partly of his own false

C: Samson Bros can use contributory negligence to defense and the damages will be
shared according to the burden between 2 parties.

15. [ Image 5637]

Michael is the managing director of Hunter Winery Pty Ltd. The board of directors
passed a resolution limiting Michael’s authority. He is not permitted to enter into a
contract which commits more than 25,000$ of company funds without express authority
from the board.

Michael decides that a picnic area with a children’s playground will enhance business,
so he signs an agreement with a contractor for $35,000 on behalf of Hunter Winery,
without consulting the board. Is the board bound to pay $25,000 or $35,000?

I: Is the board bound to pay 25k or 35k

● Area of law: Agency apparent authority

● Relevant law: Apparent authority is conceptually distinct from actual

(express or implied) authority. It is, in fact, merely the appearance of authority: "the
authority of an agent as it appears to others": Hely-Hutchinson v Brayhead Ltd [1968] 1
QB 549. Where a person is appointed to a particular position such person will have as
part of their apparent authority all the usual authority of a person occupying that
position: Freeman & Lockyer v Buckhurst Park

Properties (Mangal) Ltd [1964] 2 QB 480. without having been formally appointed, the
agent will have apparent authority to deal with third parties in a manner consistent with
the functions normally falling within the usual authority of the holder of that position. The
following case is the leading authority on this point. Freeman & Lockyer v Buckhurst
Park Properties (Mangal) Ltd [1964] 2 QB 480. See also Panorama Developments
(Guildford) Ltd v Fidelis Furnishing Fabrics Ltd [1971] 2 QB 711.

A: A managing director is vested not only with implied authority but also with apparent
authority to do all such things as fall within the usual scope of that office, including
binding the board. Thus, while Michael has actual authority to bind the board up to

$25,000, his apparent authority will bind the board by any acts which fall within his
represented authority, unless the board has specifically notified the contractor of the
restriction on his authority.

Conclusion: As it does not appear that the board has notified the contractor of the
restrictions of Michael's authority, the board will have to pay the full sum i.e. $35,000.